On June 24, 2011, the Court of Appeals for the D.C. Circuit ruled that equitable tolling may be applied in cases involving provider appeals of Medicare cost reports.  Auburn Regional Medical Center, et al. v. Sebelius, No. 1:07-cv-02075, 2011 WL 2507853 (D.C. Cir. June 24, 2011).  The issue arose in the context of provider appeals of the SSI Ratio component of the disproportionate share hospital (DSH) adjustment for fiscal years 1987-1994. The providers did not appeal the SSI Ratio issue to the Provider Reimbursement Review Board (PRRB) until they learned of the issue in 2006 (as a result of the Baystate litigation), more than a decade after the 180-day window for appealing their Medicare cost reports had passed.

The providers argued that the 180-day time limit for appealing Medicare cost report disputes should be equitably tolled because CMS “knowingly and unlawfully failed to disclose that the DSH payments had been understated”; therefore, that statute of limitations for appealing the SSI Ratio issue should not begin until the point in time when the providers learned of the issue.  The PRRB held that because it lacked the power to toll the limitations period, the providers’ claim was not timely and the PRRB was without jurisdiction to rule on the providers’ appeal.

The D.C. District Court ruled that 42 USC 1395oo, the jurisdictional statute governing provider cost appeals, does not allow for equitable tolling.  In reversing the district court’s decision, the DC Circuit noted the general rule that all limitations periods are subject to equitable tolling unless tolling would be inconsistent with the relevant statute and held that the jurisdictional statute at 42 USC 1395oo(a) “is straightforward and readily amenable to tolling.”  And although it found that equitable tolling is generally available under 42 USC 1395oo(a), the DC Circuit did not actually apply it; instead, it remanded the case to the district court to determine whether equitable tolling is appropriate under the facts specific to this case.

The DC Circuit’s ruling is good news for providers, as there may be potential for after-the-fact appeals based on the date that CMS mistakes are revealed (as opposed to the date of the Notice of Program Reimbursement), which could occur many years after the affected fiscal year.  It remains to be seen how broadly CMS will apply this equitable tolling doctrine.  The decision is available by clicking here